Dollar falls as U.S. yields drop for second day

The dollar fell as Treasury two-year yields declined for a second day on speculation lower-than- forecast job growth may prompt the Federal Reserve to be less aggressive when reducing monetary stimulus.

The yen weakened against its 16 most-traded peers as a report showed the nation’s economy expanded faster than initially estimated and as Tokyo’s winning bid to host the 2020 Olympics boosted optimism in the government’s policies. Australia’s dollar touched a six-week high and the South Korean won climbed to the highest level since May after a report showed China’s exports increased. The Canadian dollar extended gains after building permits rose to a record in July.

“The dollar has been driven higher by front-end rates,” Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas SA in New York, said in a telephone interview. “The majority is still looking for tapering, but that view has probably become more questionable or less clear cut,” he said of the market’s view of Fed policy.

The Bloomberg U.S. Dollar Index, which measures the greenback against 10 major peers, fell for a second day and touched its lowest level since Aug. 28 before trading at 1,027.24 at 3:01 p.m. New York time.

The yen depreciated 0.5% to 99.57 per U.S. dollar. It reached 100.23 on Sept. 6, the weakest level since July 25. Japan’s currency dropped 1.1% to 132.12 per euro. The dollar fell 0.7% to $1.3269 per euro, after advancing 0.3% last week.

Aussie Strength

Australia’s dollar, which is down 11.1% this year, strengthened after data showed exports rose more than expected in China, its biggest trading partner. Overseas shipments rose 7.2% in August from a year earlier, the General Administration of Customs said in Beijing yesterday. That compares with the 5.5% median estimate of economists surveyed by Bloomberg and July’s 5.1% gain.

China’s consumer prices rose 2.6% last month from a year earlier, the Beijing-based National Bureau of Statistics said today, matching the median economist estimate in a Bloomberg poll. Premier Li Keqiang is seeking to keep price gains within 3.5% this year.

The Aussie dollar rose 0.5% to 92.30 U.S. cents after touching the strongest since July 29.

South Korea’s currency gained 0.5% to 1,086.80 against the greenback after touching 1.086.69, the strongest level since May 8. Brazil’s real advanced 1.2% to 2.2783 per dollar after gaining 3.4% last week, the most since January 2012.